Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Memorandum submitted by The Daily Mail and General Trust


  The Daily Mail and General Trust (DMGT) welcomes the inquiry announced by the Culture, Media and Sport Select Committee ahead of the government's draft bill on communications. We are grateful for this opportunity to provide you with DMGT's views on media ownership and related issues.

  Our main conclusions are as follows:


    —  Plurality should be preserved by ownership regulation within each media sector. Longer term a share of voice measure may be more appropriate as media distinctions blur.

    —  With appropriate ownership limits delivering plurality within each media sector (we suggest three owners including the BBC), cross media ownership restrictions between newspapers and radio are unnecessary.

    —  Diversity of content will be delivered through a combination of ownership deregulation and a licensing regime. It should not be dealt with by ownership regulation.


    —  Newspapers transactions should be subject to discretionary review ex post facto by the Competition Commission.

    —  The same review criteria should be applied whether or not the acquirer is an existing newspaper owner.

    —  The review should be conducted by the Competition Commission and its findings should be binding on Government.

    —  Local newspapers and newspapers assets should be removed from the remit of the regime.

    —  There should be no criminal sanctions for non-compliance.


  The Daily Mail and General Trust (DMGT) is a broad based media group growing rapidly on an internationally.

  Our businesses include:

Associated Newspapers Daily Mail, The Mail on Sunday, Evening Standard, Metro, Loot and Ireland on Sunday
Northcliffe Newpapersregional newspapers, 20 daily & 21 weekly titles
Teletexton ITV & Channel 4 (analogue) on digital terrestrial, satellite & cable television and on mobile telephones
DMG Radio60 radio stations in Australia
DMG World Mediaconsumer & trade exhibitions worldwide
Euromoney Institutional Investorinternational financial publishing conferences and training
Hobsons Study Groupeducation and recruitment publishing and training for students worldwide
DMG Informationinformation and software publishing for risk managers primarily in insurance and property

  We are also investors in UK Radio and have been since its very beginning in 1973. We have a 27 per cent interest in GWR Group, one of the leading UK radio groups, and the pioneer of digital commercial radio.


  Our concerns are:

Current rules have discouraged investment

  Although DMGT is a major investor in UK radio we have been prevented from controlling a significant radio business in the UK by current regulations. This has led us, to date, to concentrate our radio operations overseas. Media laws should enable media companies like ours to invest in UK radio for the longer term, not discourage them.

Current rules discriminate against terrestrial broadcasting

  Under the existing Broadcasting Act, there are no restrictions on newspapers controlling UK licensed satellite news services, yet newspaper ownership of terrestrial radio stations is severely fettered. Rules like this are discriminatory and inhibit investment in radio. Communications regulation should as far as possible be technology-neutral.

Current rules are less liberal than other countries.

  The UK's current rules on newspaper/radio cross-ownership are less liberal than many other countries, including those with highly-regulated regimes like Canada, France, The Netherlands, Belgium, Germany, Italy, Spain and Poland. We should not slip further behind them.

Current rules give an unfair advantage to foreign media players

  EU media groups which do not own UK newspapers but which are major press owners in Europe currently have an unfair advantage over UK press groups in the ownership of UK broadcast assets. But their markets are for a variety of reasons not as open to us as our market is to them. The Government recognises this in the context of newspapers and should take the opportunity to correct this imbalance in broadcasting.


  The radio industry needs investment, in particular to develop digital radio. DMGT believes that newspapers and radio are natural partners and together can provide better services to consumers through:—

    1.  cross-fertilisation of creative ideas;

    2.  co-operative development of new services (eg local internet portals);

    3.  radio stations having access to greater news gathering resources;

    4.  pooling resources for the development of digital radio, including cross-promotion.

  Newspapers do not generally impair broadcast impartiality. Teletext, which is used by 22 million people a week, is subject to strict impartiality controls. There has never been any suggestion that the editorial independence of the service has been affected or influenced by its common ownership with the Daily Mail.

Diversity is more a licensing issue, than an ownership issue

  Concerns about diversity of services and content are best addressed through the licensing requirements rather than ownership regulation.


Regulation needs to be simple and clear

  Concerns about ownership both within and between media sectors should be dealt with by clearly defined and understandable parameters. Present arrangements — such as the Radio Authority's operation of public interest tests — are opaque, arbitrary and unpredictable.


  DMGT believes the Radio Authority's proposals for ensuring that there are a minimum number of commercial radio stations in any market is an acceptable way to achieve plurality, although given the Government's willingness to consider abolishing local newspaper ownership control, we believe local radio should be viewed in the same way.

  We support the suggestion in the Media Ownership consultation paper that the government "could deregulate further" than the current Radio Authority proposals, and we would support a system requiring a minimum of three separately owned radio stations in a market including the BBC. This principle should apply to both local and national radio.

  With the above protections in place, and plurality in radio protected in this way, we believe it is unnecessary to place further restrictions on newspaper/radio cross ownership.

  Instead, we believe that the Radio Authority's three-to-a-market proposals for maintaining local plurality can usefully be extended to the cross-media arena so that:

    —  a national newspaper would be permitted to own an INR licence provided that there were at least two other independent owners of national radio licences in the market, including the BBC. The number of other national radio licences to be counted should also include any national digital licences (other than simulcasts);

    —  as now, there should be no specific restriction on the ownership of national digital radio stations by national newspapers—to impose new restrictions would be a retrograde step;

    —  as now, there should be no cross media ownership restrictions between newspapers and national or local radio multiplexes—to impose any would be a retrograde step;

    —  if there were more than three national radio services, then the number of radio licences which could be owned by the newspaper proprietor would increase proportionately provided there were always two other owners of radio in that market including the BBC;

    —  there would need to be grandfather provisions to allow the continued holding of a licence by a newspaper organisation, or vice versa, if circumstances beyond the control of either occurred to reduce the number of other licences in the market, or if the BBC withdrew from that market.

  We believe this proposal also guarantees plurality across radio and newspapers by ensuring that there are always at least two services that are independent of any particular newspaper group. We believe the system described would be appropriate for both national and local radio markets.


  We do not disagree that some measure of media concentration may be needed to address one owner's share across the media market as a whole. We believe that our proposals above adequately guarantee plurality as between newspapers and radio. However, should Government consider that some further plurality measures across the entire media market may be necessary, we would support a Share of Voice scheme.

Share of Voice

  Measurement by Share of Voice or Media Impressions is a far-reaching proposal advanced for a number of years by DMGT and others by which to assess market positions for regulatory purposes. This is our preferred option for the future and is increasingly being considered in other countries (eg the US). However, while we recognise that the UK government may not think it would be appropriate now, we consider it important that research and modelling work is carried out under the auspices of OFCOM to ensure that in future all the necessary information is available to give such a proposal full and proper consideration.

  We would also not object to proposals, such as a sliding-scale approach as referred to in paragraph 6.5.11 of the government's consultation paper, although the exact percentages and market definitions among other things would need careful debate.


  The current newspaper merger regime, which was introduced in 1965, is no longer appropriate in today's media world, which offers a much broader range of choices to both readers and advertisers.

  Ex post facto control is now the appropriate way to govern newspaper transactions. This means that the competition authorities would have the power to review a newspaper transaction up to four months after completion, using the same procedure as is currently in place for other transactions in all other industries. Parties to a newspaper transaction could therefore decide whether to submit their proposals to the competition authorities for prior approval (or for confidential guidance), or take the risk of the transaction being called in for review.

  The review of the transaction for any public interest concerns must apply to newspaper owners (however many titles they own) and non-newspaper owners alike. If there is any sensitivity attaching to newspaper ownership (a fact which underlies both the current regime and the government's proposals), it is critical that all purchasers are subjected to the same public interest test. The review should be carried out by the Competition Commission, which has a wealth of experience in assessing both competition and freedom of expression issues in newspaper transactions. It is difficult to see what additional expertise OFCOM could bring to this process, since there has never been any suggestion that the Competition Commission is in any way ill-equipped to deal with freedom of expression and public interest judgements.

  The political element should be removed entirely from the review process. It would not serve the public interest for an independent investigative body (currently the Competition Commission) to produce a detailed report (taking evidence from interested third parties), and for the Secretary of State for Trade and Industry to then be free to overrule its conclusions.

  DMGT agrees with the Consultation Paper's proposals to remove local newspapers and newspaper assets from the remit of the regime, as well as the proposal to remove criminal sanctions for non-compliance.

  It will be important to ensure that there is no regulatory "double jeopardy" if there is some broadcast element in a newspaper take-over or vice versa. It would be unacceptable for two regulators both to be adjudicating public interest-style tests where there was some element of discretion.


Plurality tests

  In the Media Ownership consultation paper, the Government discusses the possibility of revising the existing cross ownership thresholds and applying a Plurality Test to any future business developments that exceed the new limits to introduce a degree of "permeability". So long as the Plurality Test were not a substitute for clear rules with substantially raised thresholds, but would operate in circumstances where thresholds would otherwise be exceeded, DMGT are neutral on this proposal. If it were in substitution for clear and simple rules with substantially raised thresholds, DMGT would strongly oppose it.

  DMGT would not support political influence in the conduct of the Plurality Test. If the Government is to de-politicise newspaper mergers, the same should take place in cross-media mergers.

Biennial Reviews

  The Government's consultation also proposes an automatic review mechanism every two years to respond to market developments. DMGT support this proposal and would like to see an open process of review conducted by OFCOM, making recommendations to the Secretary of State.

11 January 2002

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 1 May 2002